U.S. Stocks Outlook Is ‘Quite Positive’ for Legg Mason’s Miller

March 22 (Bloomberg) — Legg Mason Inc.’s Bill Miller said he has a “quite positive” outlook for U.S. stocks and favors technology and financial companies because of their valuations.

Technology companies are his largest holding because they are “very cheap,” said Miller, chief investment officer of U.S.-based Legg Mason Capital Management, with $16.9 billion in assets. His fund boosted stakes in financial shares in January and February.

The Standard & Poor’s 500 Index has climbed 71 percent from a 12-year low on March 9, 2009, after governments and central banks around the world maintained low interest rates and committed more than $12 trillion to stimulate the economy. The index has risen 4.6 percent in the past month.

“Given how strong the market has been in the last month, I would not be at all surprised to see the U.S. market pull back in a 3-to-5 percent range, and I’d be surprised if it’s more than that,” Miller said at a media briefing in Hong Kong today. “But the outlook is quite positive in the U.S.”

Miller, whose Legg Mason Value Trust outperformed the S&P 500 for 15 years to 2005, said if corporate profits rise 25 percent as estimated, then U.S. economic growth for 2010 may be “considerably better than the consensus expectations.”

His view compares with those of investor Marc Faber and CLSA Asia-Pacific Markets’ equity strategist Christopher Wood. U.S. stocks will probably fall this year, according to Faber, and the country’s economy won’t face a “normal” recovery as job cuts dent consumer spending, Wood said. They made the comments at an investor forum in Tokyo on Feb. 22.